Dogecoin (DOGE +4.46%) is one of the quickest decliners in a very red cryptocurrency market today. This token has declined 4.5% over the past 24 hours, as of 3:15 p.m. ET, despite bouncing off an intraday low that had brought this top meme coin down by more than 5%.
CRYPTO: DOGE
Key Data Points
Even for a meme coin, I'd argue that this move is substantial. That's because Dogecoin is still the ninth-largest cryptocurrency by market capitalization and is widely considered a fairly accurate sentiment gauge for digital assets more broadly.
Let's dive into what may have shifted with Dogecoin's investment thesis today, or if this is another run-of-the-mill market sell-off investors shouldn't pay too much attention to.
Market weakness isn't the only story for Dogecoin today
Source: Getty Images.
Yes, broader market weakness is something we need to factor into our analysis of today's dismal performance for Dogecoin. The wider cryptocurrency market declined by 2.9% over the past day, so about half of Dogecoin's move can likely be explained by broad-based selling pressure.
Much of this weakening sentiment can be attributed to yesterday's jobs report, which showed the U.S. unemployment rate surging yet again in November to 4.6%, its sixth consecutive month of 0.1% increases, and the highest unemployment level in years. Off of this year's low in January of 4% and a 4.1% level in June, that's a significant move. If we do see unemployment continue to rise, concerns about the availability of speculative capital to flow into tokens like Dogecoin are indeed meaningful.
Despite large investors scooping up 138 million DOGE tokens yesterday, investors appear to be paying closer attention to the weakening fundamentals around active monthly users and Dogecoin's total value locked (TVL). Both metrics have continued to decline, with monthly active users near the lowest levels we've seen in roughly six months, and Dogecoin's TVL sinking from around $26 million in September to under $13 million today.
Those are numbers that suggest previously robust user growth and invested capital within the Dogecoin ecosystem are deteriorating. In other words, Dogecoin's move today may have more to do with its own fundamentals than its use as a gauge of market sentiment.
